Binary Options have generated a bad reputation over the years. This is mainly due to the fact that the industry was largely unregulated for many years, and some countries thought of Binary Options as of gambling. This all changed when the industry finally gained regulation in the last couple of years. Many of you have been questioning the transparency of IQ Option, so let’s talk about how CySEC, in particular, ensures we comply with the legal requirements. License here.
What is CySEC?
CySEC stands for Cyprus Securities and Exchange Commission. CySEC was initially launched in 2001 to regulate the Cyprus financial markets. In 2004, Cyprus became a member of the European Union. This caused CySEC to become a component of European MiFID regulation which gave firms that were registered in Cyprus, access to all European markets. On May 4, 2012, CySEC announced that they officially recognized Binary Options as a financial instrument.
Responsibilities of CySEC
- They have to supervise and control the transactions carried out in the Cyprus Stock Exchange, which includes the listed companies, brokers and brokerages.
- Supervise and control Collective Investment Schemes, Licensed Investment Services Companies, mutual fund management companies and investment consultants.
- Responsibility to grant operation licenses to investment consultants, brokers and brokerage firms.
- Impose sanctions and penalties to investment consultants, brokers, brokerage firms and any other who fall under the Stock Market legislation. NOTE: IQ Option has never been fined, which is a rare fact in the industry.
What Does CySEC Regulation Mean?
Let’s say you open an account with a CySEC regulated broker, such as IQ Option. The regulation means that every transaction on your account will be under supervision, including your deposits, the trades you make and your withdrawals. If you are trading with a regulated broker:
- they are forced to keep your money in a segregated account which cannot be used by the broker for their business needs. This means that whatever the case may be with the broker – your money will always be protected.
- Regulated brokers are forced to have a third party look over their operations. They do this to ensure fair play with all brokers.
- CySEC Regulated brokers must also allow governing bodies and the public to have a look inside their operations.
You should know that once a broker is regulated, it doesn’t mean that it will have the license forever. Regulated brokers must meet certain criteria’s to become and remain licensed. If they fail to satisfy these criteria’s, they run the risk of strict penalties or worse lose their license.
Final Thoughts About CySEC Regulation
CySEC’s primary mission is to protect investors. If you decide to trade with a regulated broker, you are safeguarding your ability to trade, access to your trading funds and fair treatment from the broker.